US TERRESTRIAL PERFORMANCE RIGHTS

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Over the last decade, legislation such as the 2018 Music Modernization Act has brought the business of music into the 21st Century and righted wrongs, such as the failure to compensate creators for music recorded before 1972. While the MMA was historic, it left unfinished business. Namely, it failed to correct an injustice that has deprived artists of performance royalty income from AM/FM radio play.

While digital service providers pay sound recording performance royalties, broadcast corporations refuse to do so for AM/FM airplays, despite reaping billions in advertising dollars from the music. As far back as 1988, legendary singer Frank Sinatra called out this injustice. That this disparity still exists today is an outrage. An overwhelming majority of Americans stand with artists in the fight. Seventy percent said they support Congress taking action to address this injustice by passing legislation to finally pay creators for AM/FM airplays.

SoundExchange is a leader in the musicFIRST Coalition that is asking Congress to end this injustice, and lawmakers are heeding the call. In June 2021, a bipartisan coalition of lawmakers introduced the American Music Fairness Act.

Iconic artists such as Dionne Warwick have been a driving force in getting Congress to act. Warwick points out that “stations – most of which are now owned by a few multibillion dollar media corporations – get away with using musicians’ work to bring listeners to their stations, allowing them to charge advertisers huge amounts of money, without ever paying performers a penny. And here’s the worst part: It’s all legal.” The legislation has won the support of a wide range of groups including the National Federation of Community Broadcasters, Public Knowledge,  and Citizens Against Government Waste.

That support is due in part to the common-sense approach of the legislation. It treats competing music platforms—be that a digital streaming service, or one of the 800-plus stations owned by broadcasting conglomerate iHeart–the same.

If passed, AMFA would codify into law the performance royalty while also recognizing the importance of protecting the long-term health of medium- and small-sized radio stations. Stations that fall under $1.5 million in annual revenue and whose parent companies make less than $10 million a year overall would be asked to pay less than $2 per day ($500 annually) for the right to play unlimited music. Qualified public, college, and other noncommercial stations would pay $10 a year.

With practical and thoughtful economic impact considerations, AMFA would ensure that small businesses of all types–whether an artist hustling to build a career or small radio station relied upon by its community—are protected. The bill also protects the existing rights of songwriters and publishers by ensuring that their current royalty rates would not be affected.

Congress is poised to act on the legislation, starting with the House Judiciary Committee, which held a hearing on the issue in early 2022. At the hearing, Judiciary Committee Chairman Jerry Nadler said, “For years, broadcasters have argued that they should not have to pay a performance royalty because their airplay holds promotional value that leads to artists’ fair compensation through album sales, tour interests, and publicity. Although this has always been a dubious claim, the advent of popular digital media and streaming platforms have now made this argument progressively less relevant. Terrestrial, satellite, and digital radio all play the same music to the same audience on the same speakers.”

Once the American Music Fairness Act is enacted into law, it will be up the U.S. Copyright Royalty Board to determine the appropriate performance royalty rates for AM/FM airplay just as it does for music played on digital streaming services.

From Frank Sinatra to today’s artists, the wait to end the injustice against creators has lasted too long. With AMFA’s passage, the music industry will become a more fair and just place for hundreds of thousands of creators.

 

Helpful links

Full text of House bill 4130 – American Music Fairness Act

Michael Huppe statement to House Judiciary Committee on American Music Fairness Act

musicFIRST Coalition petition in support of American Music Fairness Act

Dionne Warwick USA Today op-ed on American Music Fairness Act